Description: After the passing of a loved one, inheritance is the last thing from your mind, but what you may not know is there are taxes associated with inheritance that must be paid.
Slide One: When it comes to inheritance, there are two ways to inherit assets and funds; with and without a will. Once the assets are divided, there are three different taxes that you may have to pay. The Pennsylvania inheritance tax varies and the amount you have to pay depends on several factors that the estate lawyer can help you with.
Slide Two: Inheriting With a Will
When someone leaves a will, it must be legally drafted and have witness signatures to make it valid. When the person passes away, the will goes into probate which is the probationary period in which the will is validated. Once validated by the probate officer, the words of the will go into effect and all parties will receive their inheritance.
Slide Three: Inheriting Without a Will
If there is no one named to inherit the estate, the first person sought out is the spouse of the deceased. Then the children come next. The spouse will get 50 percent and the rest will be split between the children. If neither is available then the state starts searching for other relatives.
Slide four: Estate Tax
Estate tax is a tax that varies by state. Estate tax works like income tax and differs based on the amount of money you inherit. This tax must be paid before the inheritance is granted. In the state of Pennsylvania, estate taxes do not have to be paid.
Slide Five: Inheritance Tax
Inheritance tax must be paid once the inheritance is paid out. The amount due depends on your relationship to the deceased. In Pennsylvania, surviving spouses and children under the age of 21 don’t have to pay taxes; Parents, grandparents, and grandchildren pay 4.5 percent taxes. Siblings pay 12 percent and all other descendants pay 15 percent.
Slide Six: Federal Estate Tax
Although there is no current estate tax in Pennsylvania, you do have to pay federal estate taxes on your inheritance. The good news is, only if you inherit more than 11.18 million dollars would you have to pay the taxes.
Final Slide: In your time of grief, it can be confusing to have to deal with taxes and inheritance. It may be best to consult an attorney when it comes to these matters especially if you stand to inherit a lot of money or a large estate.